Opportunity in a re-emerging America

Kirk Spano, the winner of the first MarketWatch competition
to find the world’s next great investing columnist, is a registered investment
advisor and founder of Bluemound
Asset Management, LLC which seeks to provide investors with greater safety,
growth, income and freedom. Kirk’s biography and various business endeavors can
be found at KirkSpano.com. Follow Kirk on
Twitter @KirkSpano or at the
Bluemound Facebook page for his columns, company analysis, letters, trade
notes and what he is reading.

The general idea in the pair is that America, and the dollar, will be fine long-term as long as the United States bends its spending curve down and continues on a path of becoming energy independent, as well as increases exports of food, high-end manufactured goods, technology and medicine over time. I am very confident those things will occur.

I am not going to argue my points again, but will simply say that if I am wrong in thinking that America will once again get around to doing the right things, then yes, those who lambasted me will be right, and America will go through an indefinite period of decline, destruction and doom.

If that should happen, and those vocal people betting against the United States become fabulously wealthy because of it, then something more important than me being wrong about an investment strategy has happened.

If the United States fails on its financial commitments, its currency and its moral obligations, then the greatest force for good on the planet has succumbed to ideology, greed and evil. Should that happen, the entire planet is in trouble. And not just financially or economically. It goes further than that.

In its assessments of future potential conflicts, the Pentagon has postulated that in about a decade, should commodity and food constraints worsen, then there will be significant outbreaks of war. In order to avoid these sorts of conflicts from occurring, the United States must be among the leaders in supplying the world with food, fuel, metals, medicine, technology and high-end goods. Without America in that group of suppliers, there will be global conflict.

Whether it was coincidence or deliberate that American spending helped lead many developing nations toward better standards of living, and whether it is coincidence or deliberate that to pay down our debts we must supply the world with important items is only significant to future historians.

Right now, the United States has both debts to pay and goods to pay those debts with. The nations we owe, primarily China and Japan — which account for over 40% of foreign-owned U.S. debt — happen to need what we have.

So in short, what I believe will happen over the next decade, given that American energy independence is coming one way or the other, is that the United States will trade in return for paying down her debts. Hopefully, the potential war scenario is unlikely and plays no role. However, I think it is fairly clear to reasonable people, that resource scarcity is a major global issue and becoming more so. Therefore, the United States will slowly improve and then boom, while she feeds, warms and otherwise helps support the standard of living globally through a major expansion of exporting scarce resources, food and goods.

In believing and saying the above, I understand that government must step up, and that the American population must too. America cannot allow cheating from a lazy bottom, nor by a greedy top, of the socio-economic scale. Both problems are equal in my eyes.

Republicans and Democrats alike need to agree on that and control both problems. I think we are on our way to doing that, so long as we do not go back to wild west deregulation and begin to require work for help.

So, once again I state that I agree with the notion that America, after trying everything else, will do the right things.

What is an investor to do?

I have touched upon this repeatedly since I began writing here. America is going through an energy technolution. Companies that are involved in it will do very well over the next decade, and probably two or three decades. There are more buy-and-hold opportunities available today than in 40 years. What makes it tough for your average investor is that most of these companies are not Dow stocks.

To ease people in, I will start with the one Dow stock I think everybody needs a piece of: General Electric
GE, -0.08%
GE is still down about two-thirds from its all-time high. During the past few years, the company has revamped itself and is once again a major player in most things energy. Subscribe to their newsletter, and see what they are doing. Gas turbines, wind turbines, solar, fracking, efficiency ...

Next, do what the smart money is doing, and invest in small profitable energy-services companies. Two of my favorites are CJ Energy
CJES, -0.52%
and Flotek
FTK, +0.65%
I have covered both here.

Invest in Williston/Bakken oil-exploration and production companies. I covered a group of small companies that are potential buy-out targets here.

Peabody Energy
BTU, -4.76%
is an interesting company as well. I haven't talked about it yet, but will next week. It's near a rock bottom price, and the world won't run in place forever or convert to alternative energies quickly.

There is more of course (I'm hoping to buy some land eventually to do a specialty farm in my semi-retirement in order to supply some local produce), but that is a good start I think.

Read my recent articles for more forward-looking ideas. (There is a biotech you might want, and an agriculture investment or two, and ...). I will be examining about a dozen companies I like over the next few weeks. My plan is to buy on weakness, maybe the weakness we are seeing now. I think that should be your plan too. That, and have a great garden and some supplies, just in case I am wrong about America doing the right things. (I'm not wrong, but fresh food is good and gardening is therapeutic.)

Disclosure: Kirk and clients of Bluemound own shares of Berkshire Hathaway (BRK.B), Peabody Energy (BTU), CJ Energy (CJES), Flotek (FTK) and General Electric (GE) . Neither Kirk nor Bluemound clients plan any transactions in the next three trading days. Opinions subject to change at any time without notice. Follow Kirk on Twitter @GALPinvesting or see his watch lists at http://GalpInvesting.com

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